Zhao v. Costco Wholesale Corporation
- Edward Davila
- 5:24-cv-07551
- U.S. District Court · Northern District of California
- 4
In Zhao v. Costco, Judge Davila granted the motion to remand because Costco filed its removal notice after the deadline.
Joanna Zhao and Ronald Zaidman obtained an order sending their California tort case back to state court; Costco Wholesale Corporation’s removal to federal court was rejected as untimely. The opinion did not resolve the underlying tort claims.
What happened
In Zhao v. Costco Wholesale Corporation, Joanna Zhao and Ronald Zaidman asked the federal court to send their California tort case back to state court. Costco had moved the case to federal court after being served with the complaint.
The court found that Costco received notice on September 24, 2024, making October 24 the deadline to file its removal notice. Costco filed on October 31. The court rejected Costco’s arguments that the complaint’s incorrect defendant name delayed the deadline or that the parties agreed to extend the removal deadline.
Judge Davila granted the plaintiffs’ motion to remand and ordered the Clerk of Court to close the federal case. The court did not decide the underlying tort claims.
The detailed version
- Zhao v. Costco Wholesale Corporation · No. 5:24-cv-07551
- Edward Davila
- Feb. 14, 2025
Background
Joanna Zhao and Ronald Zaidman filed a California tort case in the Superior Court of California, County of Santa Cruz, on June 10, 2024. They served Costco Wholesale Corporation with the complaint and summons on September 24, 2024. The complaint incorrectly identified the defendant as “Costco Wholesale Membership.”
On October 23, 2024, Costco’s counsel contacted the plaintiffs’ counsel about extending the deadline to respond to the complaint and correcting Costco’s name. The plaintiffs agreed to a 30-day extension to file a responsive pleading. Costco claimed that the plaintiffs also agreed to extend the deadline for removal, but the plaintiffs disputed that. Costco filed an answer and a notice of removal on October 31, 2024.
Analysis
Under 28 U.S.C. § 1446(b)(1), a defendant generally must file a notice of removal within 30 days after receiving the initial pleading. Because Costco received notice on September 24, 2024, the court determined that its removal deadline was October 24, 2024.
The court rejected Costco’s argument that the incorrect name in the complaint prevented the removal period from starting. The court found that Costco had otherwise been properly served, understood that it was the intended defendant, and acted with knowledge of its obligations in the case. The naming error therefore did not delay the removal deadline.
The court also found no evidence that the plaintiffs agreed to extend the removal deadline. The court determined that the parties’ agreement concerned only the deadline for responsive pleadings, and that a notice of removal is not a responsive pleading. The plaintiffs’ failure to object affirmatively to Costco’s stated intent to remove did not establish an agreement to extend the deadline.
Disposition
The court held that Costco’s notice of removal was untimely and was not justified by either the naming error or an agreement to extend the deadline. Judge Edward J. Davila granted the plaintiffs’ motion to remand. The Clerk of Court was ordered to close the federal case. The opinion did not decide the underlying California tort claims.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.